The other worry is the regulatory issues, which led to a 22 per cent YoY decline in US sales. The geography accounts for a fifth of consolidated sales. The European sales, too, reported a decline of 18 per cent. Latin America and the rest of the world business put in a better show, with 12-14 per cent YoY growth.
Gross margins, however, were better on improved product mix and lower research and development costs. Also, lower interest costs, higher other income meant the adjusted profit still grew 16 per cent.
As the integration of acquired Unichem portfolio and field force is completed, better field force productivity, growth in focus brands, and traction in product launches are likely to drive domestic growth.
The management and analysts expect domestic growth to be in double digits. Analysts at Anand Rathi expect growth in Torrent’s domestic business to bounce back in 2020-21.
Analysts at Motilal Oswal Financial Services, too, are bullish on Torrent’s prospects. They expect 29 per cent annual growth in net profit, led by India business and reduced leverage.
While most analysts maintain a ‘buy’ rating, after a 20 per cent gain in the stock since its September lows and given the regulatory overhang, near-term uptick is unlikely. Long-term investors could accumulate the stock on dips.